Nigeria Customs and Nigeria’s Growth Tragedy

In our honest quest to comprehend the foundation of Nigeria’s growth tragedy in the five years of Buhari’s Presidency, for clarity and more nuanced understanding of the problems, we need to beam our searchlight on all facets of our National life. Amongst the legion of factors that could be fanning the embers of our sluggish growth situation even before Covid-19 induced economic downturn, it could be hypothesized that the over aggressive revenue drive of Nigerian Customs service might be contributing in no small measure to our growth tragedy. The economic rout of Covid-19 and the obliteration of the economic gains accrued after the global recession, and its devastating consequences for these economies is a testament to the all-powerful importance of growth. 

If Growth matters so much in a developed economy, then it matters much-more in a developing economy with an alarming population growth like ours. Even For non-experts like my humble self, the markers of growth and the economic prosperity it engenders are not difficult to discern. Growth or its tragic opposite when they happen, at the microeconomic level, can be seen and felt in; business expenditures and revenues, individual expenditures and income, the abundance of Job opportunities etc.

In a pre-industrial economy that relies heavily on importation of inputs like ours, the role of the state’s Ports and Customs authority cannot be over emphasized. Customs and Border agencies all over the world have evolved a tripartite responsibility for taxation, security and trade facilitation. Primordially, Customs are considered to be fiscal subjects that administer duties and tariffs on import and export within a nation state. However, this classical understanding and appreciation of Customs agency as a fiscal authority has given way for a broader comprehension and appreciation of their role and functions as an apparatus of civil administration. The globalization trade and Pan-National terrorism are the twin historical forces that has led to reconceptualization of the roles and function of customs and border protection.

It was in response to these historical forces that Nation states reorganized their customs to take on additional roles in National security, supply chain security and trade facilitation. Institutions like The International Convention on the Harmonized Commodity Description and Coding System, the World customs organization, were created. The HS system was adopted in 1983 and came into force in 1988. The HS multipurpose goods nomenclature is used as the basis for customs tariffs and for the compilation of international trade statistics. It comprises about 5,000 commodity groups, each identified by a six-digit code arranged in a legal and logical structure with well-defined rules to achieve uniform classification. 

The HS is also used for many other purposes involving trade policy, rules of origin, monitoring of controlled goods, internal taxes, freight tariffs, transport statistics, quota controls, price monitoring, compilation of national accounts, and economic research and analysis. The world customs organization was instituted as a global center of customs expertise and plays a leading role in the discussion, development, promotion and implementation of modern customs systems and procedures. Thence forward, Customs all over the world are seen beyond the narrow prism of duty and tariff collection. Nations began to see them as key players in National security and crucial trade facilitation.

The devastating effect of the collapse in oil price on the revenue of Nigerian government led her to pursue a revenue drive in untapped facets of National life. VAT was increased, new taxes were levied on alcoholic beverages and Customs was tasked with a new mandate to improve on her revenue generation potentials. To his credit, Col Alli led customs pursued the custom revenue drive with crusading zeal and religious passion, resorting to crude and primitive tactics in the process, at the detriment of trade felicitation functions that could help the economy get out of recession. The honest and spirited effort of individuals and entrepreneurs to improve their financial position in a badly dented economy is at times sabotaged by the crude drive for revenue generation on the part of state officials.

Often, honest Entrepreneurs who want to import legitimate finished products, government approved raw materials and intermediate, locally unavailable packaging materials, electronics, etc find themselves dealing with deliberate inefficiency plus whimsical and capricious administration of duties and tariffs. These official acts of business sabotage manifest in various guises and coloration; it could be; delayed approval of Form M, delayed approval of Pre-Arrival Assessment Report. 

At times, it is capricious increase in freight value and the deliberate frustration of the mediation process all in a bid to increase the duty payable per shipment. These entrepreneurs grudgingly cough out this money to keep their business going, with a dampen entrepreneurial morale and confounding disillusionment. Those who can not bear such cost shift the burden to customers who have to pay more for the same unit of the item. Some consumers who find the new prices unaffordable may withdraw their patronage altogether, feeding a vicious circle.

The over-bureaucratization and overregulation of international trade processes is a chilling impediment to growth. Entrepreneurs incur needless charges at the various nodes of their interaction with Nigeria Customs. Pre-Arrival Assessment report office, Valuation units, Examination, Releasing, unblocking, DC Report, Stamping unit, Exit-gate, enforcement. The evidence is enormous that the Record revenue generation attained by the customs across these nodes is at the expense of much needed trade facilitation. It is such a Pyrrhic victory.

This same custom that has fulfilled her revenue generation mandate with Religious devotion and crusading zeal is utterly wanting in her national security function. The Nigerian customs has not been able to check the inflow of contraband and prohibited goods and merchandise, thereby distorting the economy. Despite this zeal and crusade, the Nigerian customs has been woefully inadequate in checking the illicit inflow of arms and ammunition into the hands of violent criminals.

For the sake of economic growth and National security, The Nigerian customs need to take her Trade facilitation and National security obligations as serious as it takes her revenue mobilization drive. The federal Government cannot continue to pursue the former at the expense of the later if she is serious and honest about her economic growth and National security goals. The triumphalist zeal with which the customs announce the realization of Revenue target should be channeled to a more economically profitable venture. It is a gross misconception of role for state officials to conflate law enforcement with revenue generation. The conflation of this disparate role through deliberate policy does not only incentivize corruption, it also saps the tax and entrepreneurial morale of the citizen. The actualization of a Nigeria where entrepreneurs and individuals see payment of duty and taxes as a contribution to National wellbeing and not as burden and financial loss is a goal for which must strive.